FAIR Canada's report finds DIY-Only investors less likely to use platform tools and take higher risks
FAIR Canada released new research today, challenging assumptions about the world of do-it-yourself (DIY) investors, with findings showing that 45 percent of Canadian investors now have some DIY investments.
The research reveals that DIY-Only investors have lower risk tolerance and confidence compared to ‘Hybrid’ investors who also work with an advisor.
Additionally, DIY-Only investors are less likely to use the tools available on their DIY platform than Hybrid investors.
The research was commissioned by FAIR Canada to better understand the behaviours and attitudes of DIY-Only investors, who manage investments entirely on their own, and Hybrid investors, who seek advice from advisors while also managing some investments.
The study surveyed 1,350 Canadian investors, with 46 percent identifying as DIY-Only investors and 54 percent as Hybrid investors.
Jean-Paul Bureaud, FAIR Canada’s executive director, noted, “The rise in DIY investing reinforces the need for regulators to help all investors make informed decisions with clear, transparent information and to ensure fairness in the investing landscape.”
According to FAIR Canada’s research, 72 percent of Hybrid investors report feeling confident about investing, compared to 61 percent of DIY-Only investors.
Hybrid investors are also more likely to make riskier investments (34 percent) than DIY-Only investors (28 percent). Men and younger DIY investors are more inclined to take these risks.
The study also shows that Hybrid investors are twice as likely to apply for trading options, futures, or over-the-counter derivatives (28 percent vs 15 percent) and are more likely to use credit or margin to finance their investments (21 percent vs 11 percent).
Additionally, Hybrid investors are more likely to diversify their portfolios and display greater confidence in their investment decisions.
While 33 percent of DIY-Only investors report not using any tools on their online platforms, only 16 percent of Hybrid investors share this experience.
In contrast, DIY-Only investors are more reliant on financial statements (44 percent) compared to Hybrid investors (35 percent). DIY-Only investors are also more likely to depend on media or advice from family and friends.
Almost 40 percent of DIY-Only investors and 30 percent of Hybrid investors report distrust in investment advisors. Furthermore, only 43 percent of DIY-Only investors believe the investing process is fair to the average investor, compared to 52 percent of Hybrid investors.
Bureaud suggested that the report highlights the need to reassess how DIY platforms are regulated.
“Regulators are now looking at how DIY platforms can be improved to offer non-tailored advice to investors,” he said. FAIR Canada plans to contribute to the evolving regulatory framework for DIY investors.
